The slope of these moving averages evaluates the strength of the trend. Bank of America’s moving averages are all sloping upwards, which signals strength in the uptrend. Bank of America stock is battling it out around its 50-day moving average but is supported by a strong uptrend, as interpreted from the simple moving averages.
Investor sentiment is another key to the success of a stock. One way to gain perspective into investor sentiment is through the use of the options market. More specifically, taking a look at the implied volatility and implied volatility skew levels of Bank of America options may help determine if investors are bullish, neutral, or bearish.
The implied volatility of Bank of America options is at 36.12 percent today, which coincides with a 76th percentile over the last 30 trading days and 35th percentile over the last 90 trading days. What does this mean? This means that investors or traders are buying a good amount of protection as compared to the last 30 and 90 trading days. The implied volatility skew of March and April put options is about average while call option skew is at a little bullish.
Now, what does this mean? As of Monday, there is an above-average demand from call buyers or below average supply of call sellers while there is an average demand by put buyers or an average demand by put sellers, all neutral to bullish over the next 2 months. Investors are buying up protection but are leaning more neutral to bullish over the next two months.